IN THE COURT OF APPEALS OF TENNESSEE
WESTERN SECTION AT JACKSON
______________________________________________
JOHN BURTON TIGRETT,
Vs.
Plaintiff-Appellant,
Shelby Law No. 77595 FILED
C.A. No. 02A01-9703-CV-00057
October 31, 1997
UNION PLANTERS NATIONAL BANK,
Cecil Crowson, Jr.
Defendant-Appellee. Appellate C ourt Clerk
____________________________________________________________________________
FROM THE SHELBY COUNTY CIRCUIT COURT
THE HONORABLE ROBERT L. CHILDERS, JUDGE
Richard Glassman, James F. Horner; Glassman, Jeter,
Edwards & Wade of Memphis
For Appellant
Mark Vorder-Bruegge, Jr.; Wyatt, Tarrant & Combs
of Memphis
For Appellee
AFFIRMED
Opinion filed:
W. FRANK CRAWFORD,
PRESIDING JUDGE, W.S.
CONCUR:
DAVID R. FARMER, JUDGE
HOLLY KIRBY LILLARD, JUDGE
Plaintiff, John Burton Tigrett, appeals from the trial court’s order dismissing plaintiff’s
complaint against defendant, Union Planters National Bank.
This case is another of the disputes spawned by the financial problems that plagued the
construction of the Pyramid Arena in downtown Memphis. The dispute in this case arises out
of an escrow account established as a requirement of the management contract between the
developer Pyramid Management Authority, Inc. (PMA) and the City of Memphis and Shelby
County which required PMA to fund an escrow account with not less than three million dollars
in assets. Tigrett, a shareholder in PMA, arranged to fund a portion of the escrow account with
375,000 shares of General Oriental Investment (GOI) stock.1 Tigrett claims he is the
constructive and beneficial owner of the GOI stock and asserts that because of this fact he is a
third party beneficiary to the escrow agreement.
The escrow agreement dated July 14, 1989, names Union Planters as the escrow agent.
The parties to the management contract for the Pyramid are the developer, PMA, and the city and
county. The escrow agreement provides that the escrow agent as part of its duties was to make
certain investigations or inquiries into the value and marketability of the GOI stock from time
to time. The agreement also provides that at the expiration of its term, the escrowed property,
if not otherwise disposed of pursuant to the terms of the agreement, would be returned to PMA.
On September 7, 1990, the escrow agreement was amended to provide for a stated value
of the stock and a substitution of the escrowed stock with property having a more readily
ascertainable value. The amendment states:
(2) Except as provided in paragraph (3), below, for purposes of
establishing the market value of the share of General Oriental
Investments Limited (“GOI”) currently held in escrow as required
by Section (1)(c) of the Escrow Agreement, Lessee [City of
Memphis and County of Shelby], having been provided with
audited financial statements of GOI, has determined that the GOI
shares have, and hereby instructs and authorizes the Escrow
Agent [Union Planters] to use, a value of US $7.85 per share for
the period commencing with this date through a date which is the
earlier of (i) January 2, 1991, or (ii) the date on which The Great
American Pyramid Joint Venture, of which Manager [PMA] is a
joint venture partner, secures its project financing of $55,000,000,
or more, and receives its first draw from the proceeds therefrom
(the “Fixed Valuation Period”).
* * *
(5) Manager further covenants and agrees that on or before the
termination of the Fixed Valuation Period, it will replace the
shares of GOI, currently held as part of the Existing Collateral,
with cash, letter of credit or marketable securities listed on the
1
The Share Certificates are in the name of Jovest Foundation and were duly assigned
to Union Planters by instrument signed by an authorized signatory.
2
New York Stock Exchange; the American Stock Exchange; or
listed on NASDAQ and for which the parties mutually agree are
publicly quoted and traded on a sufficiently frequent basis so as
to allow a market value to be routinely obtained.
By subsequent amendment, on January 10, 1991, the value of the stock was set at $10
per share, and the date in the fixed valuation period was changed to April 1, 1991. This
amendment also provided for the relinquishment of 75,000 shares, reducing the escrowed
number of GOI shares to 300,000.
On May 2, 1991, Union Planters filed a complaint of interpleader and for declaratory
relief in the Shelby County Chancery Court tendering the GOI stock to the chancery court. The
complaint names as defendants the city, the county, PMA, the president of PMA, Jovest
Foundation, and Tigrett. Union Planters’s complaint set out the details of the escrow agreement
and the amendments to the escrow agreement setting out the stated value for the GOI stock. The
complaint averred that pursuant to the amendment to the agreement, GOI stock was to be
replaced with marketable securities by April 1, 1991, but that PMA had failed to comply with
this requirement. The complaint further averred that Union Planters had been instructed by the
city and county to sell the GOI stock, that PMA agreed that this should be done for the highest
price possible, but that Tigrett demanded that Union Planters not sell the stock.
The record is not clear as to what responsive pleadings were filed to the complaint, but
it appears that nothing was done concerning the petition until the fall of 1994 when Union
Planters was notified of a tender offer for all of the outstanding shares of GOI stock. When
Union Planters learned of the tender offer, it filed a motion with the chancery court for
instructions on whether the stock should be sold pursuant to the tender offer. Union Planters
requested an expedited hearing because of the pending expiration of the tender offer. The motion
avers that “GOI is a closely held foreign corporation whose stock is quoted in British pounds.
It has been traded on the Vancouver stock exchange and in London but rarely trades.” The
motion merely requested instructions as to what the escrow agent should do in the face of the
tender offer. The chancery court held a hearing at which Tigrett introduced proof that if the sale
of the stock were made he would have an approximately $800,000 tax loss, and his objection to
the sale of the stock was based upon his assertion that there was no triggering event in the escrow
agreement that would authorize such a sale. The chancellor found that the terms of the
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agreement as amended required that “marketable securities” be placed in escrow in place of the
GOI stock by April 1, 1991, and that this had not been done. The chancellor also noted that
Tigrett had the opportunity, if he so desired, to make the replacement prior to any sale of the
stock pursuant to the tender offer. Union Planters, through its attorneys, advised the court that
it had been unable to find a ready market for the stock and that the escrow agreement had been
amended to set a price of $10.00 per share for the stock because of the lack of a ready market.
The chancellor found that the salability of the GOI stock was somewhat questionable and that
the tender offer should be accepted. Union Planters, as the escrow agent, was authorized and
directed by the court to sell the stock pursuant to the tender offer. Tigrett sought a Rule 10
extraordinary appeal and a stay of the trial court’s order, but the Court of Appeals denied the
extraordinary appeal and the stay. Subsequently, the Supreme Court did likewise.
In this underlying litigation, although it is not entirely clear, it appears that the City of
Memphis and Shelby County filed cross complaints against PMA, Shlenker, Tigrett, Jovest
Foundation and Union Planters, and in turn Tigrett filed a counter complaint against the city and
the county. Subsequently, in June, 1995, Tigrett was granted leave by the court to file an
amended and supplemental counter complaint against Union Planters. The counter complaint
alleges in substance that Union Planters had a fiduciary duty to give the parties to the agreement
true and accurate information regarding the available market and the potential sales price of the
GOI stock, and that Union Planters made a false representation concerning difficulty in obtaining
quotes on the stock. The complaint further avers that counsel for Union Planters made false
representations to the trial court and later to the Court of Appeals at the time of the application
for extraordinary appeal and stay. The alleged misrepresentations were that the stock was not
saleable, there was no market for the stock, and that therefore the tender offer needed to be
accepted as in the best interest of the parties. The complaint avers that because of the
misrepresentations on the part of Union Planters, the trial court authorized and directed the sale
of the stock pursuant to the tender offer. On March 22, 1996, the underlying action was
dismissed with prejudice by consent order of dismissal as to all matters except the counter
complaint of Tigrett against Union Planters which was dismissed without prejudice to the
refiling of same.
On April 16, 1996, the complaint in the instant case was filed. The complaint sets out
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the background information concerning the escrow agreement, Union Planters appointment, and
avers that Union Planters as part of its duties made investigations or inquiries into the value and
marketability of the shares of stock and continued periodically to secure this information until
about December, 1990. The complaint further avers that Union Planters learned that there was
an available market for the stock and that it could be sold by Shearson Lehman Brothers for U. S.
currency. The complaint also avers that information was received from William Woods, a
stockbroker in London, concerning the value and trade ability of the stock. The complaint
alleges that Union Planters had a fiduciary duty to give true and accurate information regarding
the available market and potential sales price of the stock to the respective parties to the
agreement and that it breached its duty. The complaint further alleges that in April, 1991, Union
Planters represented that it had difficulty in obtaining bid quotes for the stock, and it was
doubtful that they could sell the stock to cure a deficiency in the amount required by the escrow
agreement. The complaint further alleges that in May of 1991, Union Planters filed a complaint
requesting adjudication as to the rights and obligations of the parties to the escrow agreement
as to the 300,000 shares of GOI stock. Then, in the fall of 1994, after Union Planters was
notified of a tender offer, it filed a motion for instructions as to the sale of the stock pursuant to
the tender offer. The complaint avers that the city, the county, and PMA relied upon the
defendant’s information and joined in the motion to sell the stock. The complaint further alleges
that after the trial court ordered that the stock be sold pursuant to the tender offer, an application
was made with the Court of Appeals for an extraordinary appeal and for a stay of the trial court’s
order. The appeal and stay were denied by the Court of Appeals and ultimately by the Supreme
Court. The complaint avers that in the trial court and in the appellate court, Union Planters made
willful misrepresentations to the courts that there was no market for the stock, that it was not
saleable, that Union Planters attempted for a period of years unsuccessfully to locate a market
for the stock, and that because of these misrepresentations the court ordered that the stock be sold
pursuant to the tender offer, resulting in damages to Tigrett. Union Planters responded to the
complaint with a motion to dismiss for failure to state a claim upon which relief can be granted.
In support of the motion, Union Planters relied upon parts of the record in the underlying action.
The court’s order granting the motion and dismissing the action specifically relies upon this
extraneous material. Accordingly, Union Planters’s motion will be treated and disposed of as
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one for summary judgment. Tenn. R. Civ. P. 12.02.
The only issue on appeal is whether the trial court erred in granting summary judgment.
A trial court should grant a motion for summary judgment only if the movant
demonstrates that there are no genuine issues of material fact and that the moving party is
entitled to judgment as a matter of law. Tenn. R. Civ. P. 56.03; Byrd v. Hall, 847 S.W.2d 208,
210 (Tenn. 1993); Dunn v. Hackett, 833 S.W.2d 78, 80 (Tenn. App. 1992). The party moving
for summary judgment bears the burden of demonstrating that no genuine issue of material fact
exists. Byrd, 847 S.W.2d at 210. When a motion for summary judgment is made, the court must
consider the motion in the same manner as a motion for directed verdict made at the close of the
plaintiff's proof; that is, "the court must take the strongest legitimate view of the evidence in
favor of the nonmoving party, allow all reasonable inferences in favor of that party, and discard
all countervailing evidence." Id. at 210-11. In Byrd, the Tennessee Supreme Court stated:
Once it is shown by the moving party that there is no genuine
issue of material fact, the nonmoving party must then
demonstrate, by affidavits or discovery materials, that there is a
genuine, material fact dispute to warrant a trial. [citations
omitted]. In this regard, Rule 56.05 provides that the nonmoving
party cannot simply rely upon his pleadings but must set forth
specific facts showing that there is a genuine issue of material
fact for trial.
Id. at 211. (emphasis in original). Where a genuine dispute exists as to any material fact or as
to the conclusions to be drawn from those facts, a court must deny a motion for summary
judgment. Byrd, 847 S.W.2d at 211 (citing Dunn, 833 S.W.2d at 80).
The crux of Tigrett’s complaint is that Union Planters, by virtue of its false and
fraudulent misrepresentations to the court, procured the order authorizing the sale of the GOI
stock.
Union Planters asserts several reasons to justify the trial court’s dismissal of Tigrett’s
action, including that he cannot now collaterally attack the trial court’s order authorizing and
directing the sale of the stock. Tigrett asserts, however, that because he filed a counterclaim in
the underlying action which was dismissed without prejudice to refile, there was no litigation of
the issues and thus they can now be litigated. We must respectfully disagree. Tigrett apparently
loses sight of the fact that the alleged cause of his misery is the trial court’s order authorizing and
directing Union Planters to sell the stock. The bank’s interpleader action sought instruction and
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authority which was granted in the order. Although Tigrett later filed a counterclaim in the
underlying action seeking monetary relief, that relief could only be obtained if the order
complained about was determined to be erroneous because of fraud or whatever reason. Upon
dismissal of the counterclaim, cross claims, and the principal complaint in the underlying action
with prejudice, the order of the trial court authorizing and directing the sale of the stock became
a final order.
We must bear in mind that Union Planters, in selling the stock, acted in compliance with
the order of the chancery court directing the bank to make the sale. Clearly, Union Planters was
justified in so acting. This justification is best expressed by a maxim applicable to the chancery
court and its orders:
5. . . . (He who does anything by command of the Judge will not
be deemed to have acted from an improper motive, because it was
necessary for him to obey). This rule protects a clerk who pays
out money, or does any other act, by order of the Court. It
protects the sheriff in the proper execution of the orders, decrees
and process of the Court; and protects receivers, special
commissioners and others, who do any act in pursuance of an
order or decree of a Court. The party dissatisfied with any such
order or decree must take the proper steps to have it suspended,
corrected or reversed.
§ 37 (5) Gibsons’ Suits in Chancery (Inman, 6th ed.)
Tigrett asserts that the chancery court order was obtained by virtue of the fraud and
misrepresentation of Union Planters. These matters could have been litigated in the underlying
chancery action and any subsequent appeal. In order for Tigrett to prevail, it is essential to prove
that the chancery court order was erroneously entered and thus the instant action is a collateral
attack on the chancery court order.
Generally, a party may file an independent action to set aside a judgment only under
unusual and exceptional circumstances and then only where no other remedy is available or
adequate. Jerkins v. McKinney, 533 S.W.2d 275, 281 (Tenn. 1976). In Schorr v. Schorr, C.A.
No. 02A01-9409-CH-00217, 1996 WL 148613 (Tenn. App. W.S. Mar. 29, 1996), this Court
said:
In an independent action to set aside a judgment on the basis
of fraud, the complaining party must prove extrinsic, as opposed
to intrinsic, fraud. New York Life Ins. Co. v. Nashville Trust
Co., 200 Tenn. 513, 517-21, 292 S.W.2d 749, 751-53 (1956);
Medlock v. Ferrari, 602 S.W.2d 241, 245-46 (Tenn. App. 1979);
Noll v. Chattanooga Co., 38 S.W. 287, 290-91 (Tenn. Ch. App.
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1896), aff’d orally Oct. 28, 1986. The distinction between
intrinsic and extrinsic fraud existed at common law, id., and is
maintained today both under the rules of civil procedure and in
case law. Tenn.R.Civ.P. 60.02 (Michie 1995); Stacks v.
Saunders, 812 S.W.2d 587, 592 (Tenn. App. 1990); Brown v.
Raines, 611 S.W.2d 594, 597 (Tenn. App. 1980).
Prior to the adoption of the Tennessee Rules of Civil
Procedure, a party seeking to set aside a judgment on the basis of
intrinsic fraud was required to prove the fraud either at trial, in a
motion for a new trial, or on appeal. Noll, 28 S.W. at 290-91.
Upon completion of the appellate process, a party could no longer
seek to set aside a judgment on the basis of intrinsic fraud:
The trial is his opportunity for making the truth
appear. If, unfortunately, he fails, being
overborne by perjured testimony, and if he
likewise fails to show the injustice that has been
done him on motion for a new trial, and the
judgment is affirmed on appeal, he is without
remedy.
Id. at 291. This rationale is consistent with fundamental
principles of jurisprudence, which state: “Material facts or
questions which were in issue in a former action and were there
admitted or judicially determined, are conclusively settled by a
judgment rendered therein, and such facts or questions become
res judicata and may not again be litigated in a subsequent action
brought between the same parties or their privies.” Medlock, 602
S.W.2d at 246.
Tigrett’s allegations in this case are allegations of intrinsic fraud and cannot be the basis
for a collateral attack of the chancery court’s order.
Although not absolutely necessary to a decision in this case, some comment on Tigrett’s
statements in his brief might be enlightening. Tigrett apparently took the position in the trial
court, and takes the position in this appeal, that the writer of this opinion, in considering Tigrett’s
application for extraordinary appeal and a stay of the chancery court’s order, recognized that
Tigrett could have an action for damages if the chancery court order was erroneously entered.
Tigrett misconstrued what was said. It should be noted that at the time Tigrett, through his
counsel, was attempting to obtain a stay of the trial court’s order directing the sale of the stock,
the position of Tigrett was that the stock should not be sold, and that there was no breach of the
escrow agreement justifying the sale as called for by the city, the county, and PMA. Tigrett’s
counsel was quite adamant that the stock simply should not be sold. The court’s comment was
in that context and was to the effect that if the city and county improperly declared a default and
Tigrett suffered damages by virtue thereof, the chancery court in that action could award
8
damages for the improper “foreclosure.” This is analogous to the erroneous granting of an
injunction which occasions damages to the enjoined party. There was no indication at the time
of the mentioned proceeding that Tigrett was complaining about the actions of Union Planters.
For the reasons stated, the order of the trial court is affirmed, and this case is
remanded for such further proceedings as may be necessary. Costs of appeal are assessed against
appellant.
_________________________________
W. FRANK CRAWFORD,
PRESIDING JUDGE, W.S.
CONCUR:
____________________________________
DAVID R. FARMER, JUDGE
____________________________________
HOLLY KIRBY LILLARD, JUDGE
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